Supreme Court’s embrace of ‘major questions’ could rein in administrative state
Peter Wallison, Washington Examiner, 9/19/22
In deciding West Virginia v. EPA last term, the Supreme Court invoked a rarely used concept called the “major questions doctrine.” This holds that when an administrative agency claims authority to issue a far-reaching or unprecedented new rule, it must be able to show that Congress specifically authorized what the agency is proposing. At this time, with this court, we are likely to see many more cases in which this agency-restricting doctrine is invoked.
The underlying policy of the major questions doctrine is as clear as the Constitution itself: Under the Constitution’s separation of powers, Congress must make the laws, not an administrative agency. Administrative agencies cannot use a generally stated authority from Congress, such as the EPA’s authority to address air pollution or climate change, to create rules that the agency cannot show were intended or even contemplated by Congress. If the conservative majority of the court stays with this position — and there is every indication that it will — the result will be a narrowing of the powers of administrative agencies.
The facts of the case provide some guidance for how far agencies can stray from the authority they receive from Congress. Over time, the EPA has been authorized to limit air pollution as well as the release of carbon dioxide and other so-called greenhouse gases that some scientists believe can create unwanted climate change. However, the EPA used this authority to issue regulations that would completely change the structure of the private power industry.
Under existing EPA rules, electricity-generating power plants must use the “best system of emission reduction” consistent with their means of power production, whether they burn coal or gas. Coal, even under this standard, will always emit more greenhouse gases than natural gas emits per unit of energy. But as long as coal plants use the best technology available, the law says they can continue to operate.
Also — and this is a unique element of the interrelated electric power industry — when one power generator reduces its production, the others can automatically increase theirs.
So in the EPA’s “Clean Power Plan” rule, as the Supreme Court’s decision described it, the operator of a coal plant could choose one of two options: either to reduce its own production and sell a credit to others whose production has increased as a result or to “build a new natural gas plant, wind farm, or solar installation, or invest in someone else’s existing facility, and then increase generation there.”
According to the EPA, this change in industry structure, called “generation-shifting,” would reduce greenhouse emissions by reducing the production of existing coal plants. But in effect, it completely changed the coal-fired generating industry, forcing it to reduce its production and invest “outside the fence” in non-coal generating sources. Whether or not this is good climate policy, it was a major change in the way the power industry had previously been regulated. It probably threatened the viability and profitability of generating power from coal.
But did Congress authorize (or would it authorize) such a major change in the way power generation from coal was regulated? This question put the issue front and center. How far can a regulatory agency go, beyond the words Congress used to establish the agency’s authority, before it has begun to make laws instead of merely implementing them? This is one of the most fundamental questions that the Supreme Court has faced in the past and will confront in the future.
As the world and the U.S. economy become increasingly complex, can Congress be expected to anticipate these changes? On the other hand, if we are going to have a system in which administrative agencies (and not Congress) are making all the rules, aren’t we then really governed by a faceless and unelected bureaucracy, instead of the people we elect to represent us?
Political scientists and other observers have noted that, over many years, Congress has been able to avoid tough decisions by sending ambiguous authority to administrative agencies. Then, when constituents complain about the breadth of regulations, members of Congress blame the agencies rather than their own failure to use clear and precise statutory language. Indeed, one of the principal reasons the Supreme Court has probably used the major questions doctrine in this case is to force Congress to authorize rules that would reduce emissions of greenhouse gases if it is serious about the issue.
Finally, one other important element in this case deserves notice. The word Chevron appears nowhere in the court’s decision — only in the dissent. This is significant. In 1984, the Supreme Court unanimously held in Chevron v. Natural Resources Defense Council that lower courts should defer to administrative agencies’ views about their regulatory authority when those views are “reasonable.” The decision became one of the most cited and important in administrative law and clearly added significant heft to agency powers.
West Virginia v. EPA could have been a classic Chevron case, with the EPA arguing that its decision on the elements of the Clean Power Plan deserved what was called Chevron deference. The fact that Chevron appears nowhere in the majority’s decision (written by Chief Justice John Roberts) suggests that the court will no longer employ the Chevron doctrine — another blow to the administrative state.
Peter J. Wallison is a senior fellow emeritus at the American Enterprise Institute. His most recent book is Judicial Fortitude: The Last Chance to Rein in the Administrative State (Encounter, 2018).